The Pros And Cons Of VA Home Loan

VA’s Popularity Why the popularity? The first and most obvious answer is that there is no down payment required. That’s the biggest advantage, but there are others. The VA home loan allows borrowers to have a monthly mortgage payment that is greater as a percentage of monthly income compared to conventional mortgage loan programs. A borrower with a VA home loan can have up to 41 percent or more of his or her gross monthly income dedicated to a housing payment, while a con- ventional mortgage has its standard housing income guideline at 28 percent. Over the past two decades there have been several attempts at creating different mortgage programs introduced to the market with little or no money down and reduced credit standards. These programs

And while VA home loan numbers have historically averaged about one hun- dred fifty thousand mortgage loans per year, recent figures show that in 2012 there were more than half a million VA loans issued, the highest level of activity in more than twenty years. Uses A VA home loan can be used for a variety of purposes, the first and primary of which is to purchase a home. A VA purchase mortgage can be used to buy a single family residence, a duplex, a 3-4 unit (triplex or fourplex), a condominium, a co-op, and manufactured and mobile housing. One of the main requirements for any of these properties is that the property must be owner-occupied and not used solely as an investment property. A VA home loan can also be used for refinancing, regardless of whether the orig- inal loan was a VA loan. A VA refinance mortgage can be a VA-to-VA refinance, an FHA-to-VA refinance, or a conventional-to-VA refinance. Over the course of a refinance, qualified borrowers may also pull out additional eq- uity in the form of cash. There are three types of VA mortgage refinancing: a rate and term refinance, a streamlined or Interest Rate Reduction Refinance Loan (also known as IRRRL), and a cash out refinance. There are also allowances for construction loans, although finding a lender who is- sues VA construction mortgages will be difficult, if not impossible. In lieu of ob- taining a VA construction loan, you can still obtain a traditional construction loan from a bank and use your VA eligibility to pay off the construction loan with a VA loan. Veterans can also take advantage of VA Home Improvement Loans, which provide a guarantee for funds used to make existing homes more energy-efficient, with funds of up to $6,000 available for items such as heating and air conditioning sys- tems, storm windows, insulation, and other